A top New York lawmaker said some form of bailout for the state’s struggling commercial casino industry will be on the table as the legislature begins negotiations toward a state budget for the new fiscal year that began Sunday.
Senate Majority Leader John Flanagan said that relief, most likely in the form of tax cuts, are “being discussed.”
“I think everyone is trying to make a solid effort,” he said.
But that’s not to say it won’t be a heated topic, with hundreds of jobs potentially on the line, and many lawmakers, joined by Gov. Andrew Cuomo, opposing any concessions.
The senator’s remarks came after Rochester businessman Tom Wilmot, principal owner of del Lago Resort & Casino in the Finger Lakes, journeyed to Albany last week to lobby for assistance for the property, which fell 44 percent short of its revenue projections in the 12 months since it opened last February at a cost of $440 million and faces a continued uphill struggle for players in one of the most crowded statewide gaming markets in the country.
Moody’s Investors Service earlier this year downgraded del Lago’s credit rating to “negative,” stating that “without a substantial improvement in revenue, del Lago will not be able to achieve a level of performance that can support its existing debt capital structure.”
“We’re paying the bills,” Wilmot told USA Today’s Albany Bureau last week. But, he added, “Long term, it isn’t going to be sustainable without some help.”
No one has yet specified what shape such “help” will take, but it’s believed a reduction in the property’s tax rate of 37 percent of slot revenue and 10 percent on table games will head the list.
The problems are not del Lago’s alone. The other two commercial casinos that opened around the same time—Rivers Casino & Resort Schenectady and Tioga Downs Casino Resort in Nichols on the Pennsylvania border—also have fallen well short of the revenues they forecast when they were licensed in 2014 in the most dramatic expansion of gambling in New York since racetracks were granted slot machines a decade ago.
Their prospects weren’t helped any with the opening last month of yet another competitor, Resorts World Catskills, the largest and most elaborate of the four commercial casinos, and the closest to New York City. It brought to 16 the number of standalone locations in the state offering casino-style gambling. There are also slot machines at nine racetracks, machine gaming at a Long Island OTB, a state lottery, various forms of charitable gaming and internet-based wagering on fantasy sports.
Like del Lago, Rivers also is seeking financial concessions, according to state Assemblyman Phil Steck, whose district includes the property. Tioga Downs isn’t saying, but any breaks granted del Lago and Rivers will likely be extended its way as well.
del Lago’s center-state location is unique, though, in that it’s sandwiched among competition on a Las Vegas scale. To the west are major casinos owned by the Seneca Indian Nation in and around Buffalo, Niagara Falls and Salamanca. To the east and northeast the Oneida Indian Nation operates gaming resorts in Verona, Chattenango and Bridgeport.
But then anti-bailout Assemblyman Gary Pretlow, who chairs the Racing and Wagering Committee in the lower house, said ownership should have taken that into account from the start: “I think it was a bad business decision to move there in the first place,” he said, “but they knew what they were doing when they got into. They made their bed, basically.”
Moreover, it was a controversial location from the outset, straddling the border of a zone of exclusivity the state had promised the Senecas. It added fuel to a simmering dispute between the Senecas and the Cuomo administration over the terms of the tribes’ federally mandated gaming compact with the state, which obliged the tribe to submit to a form of taxation equal to 25 percent of its annual slot revenue, a sum exceeding $100 million a year.
A month after del Lago opened, the tribe announced it was stopping the payments, claiming the revenue sharing expired at the end of 2016. The state reads the compact differently, saying the tribe is obliged to continue the payments. The dispute currently is in arbitration.
Last week, del Lago weighed in to the dispute, blasting the Senecas’ position as a “blatantly unfair competitive disadvantage” in the words of a del Lago spokesman.
“What are they doing with that newfound windfall? Using more than $50 million to provide additional promotions and incentives—particularly in the Rochester area—to lure customers from del Lago. And it’s working,” he said.
Philip Pantano, a spokesman for the tribe, quickly fired back, blaming del Lago’s troubles on “unrealistic expectations.”
Ownership thought it could “take significant market share” from the Oneidas and the Senecas, as well as bring in new revenue, he said.
“Which of those promises did they fail to live up to? The numbers don’t lie. The projections haven’t materialized, and now, del Lago is turning to the state to fund their failure to meet their own goals. That’s their fault, not ours.”
